Photoshop 7 is not supported on MS Windows 8. It was created long before Windows 8 was created I would suggest that you click on
http://www.adobe.com/products/photoshopfamily.html to view current versions of Photoshop that will install on Windows 8
I hope this will answer your question
I understand that it is difficult to determine which forum to post in since there are so many. This particular forum (sharing and storage) was created to help those transitioning from Photoshop.com to Adobe Revel. I am moving your post to the correct forum so that it can get proper attention.
I'll put this posting in the photoshop community so others can benefit from this answer.
We also have many other forums relating to other Adobe products
Photoshop 7 should work on windows 8 unless your hard drive free space is around 1TB or more.
Have you tried installing ps 7 on windows 8?